Tag: concessions

Trade frictions between the world’s two largest economies go well beyond the parameters of imports and exports. Washington has been attempting to negotiate with Beijing about issues like forced tech transfers and intellectual property theft, but there’s a growing sense among international analysts that talks may also be touching on other deep-rooted issues in their relationship, particularly on the national security and military front. The ongoing spat is a reflection of great power rivalries, p

Trade frictions between the world’s two largest economies go well beyond the parameters of imports and exports.

Washington has been attempting to negotiate with Beijing about issues like forced tech transfers and intellectual property theft, but there’s a growing sense among international analysts that talks may also be touching on other deep-rooted issues in their relationship, particularly on the national security and military front.

The ongoing spat is a reflection of great power rivalries, political scientist Joseph Nye wrote in a Project Syndicate editorial last month: “It is much more than a typical trade dispute like, say, America’s recent clash with Canada over access to that country’s dairy market.”

Many economists have pointed out that the current dispute is more of a tech war than a tariff war as U.S. President Donald Trump’s administration targets China’s technology sector practices. Beijing’s militarization of the South China Sea and the sovereignty of Taiwan could also be influencing negotiations.

Japanese Prime Minister Shinzo Abe, fresh from winning a third term as premier, is expected to walk a fine line when he meets President Donald Trump next week as Tokyo looks to avoid a trade war with the U.S. The move is widely seen as a bargaining tool for Washington to get what it has long sought from Tokyo — a free trade agreement. It’s also politically embarrassing for Abe, who has presented himself as someone with close ties to Trump, Harris explained. That’s currently the case with Beijing

Japanese Prime Minister Shinzo Abe, fresh from winning a third term as premier, is expected to walk a fine line when he meets President Donald Trump next week as Tokyo looks to avoid a trade war with the U.S.

Earlier this month, Trump indicated he could impose a 25 percent duty on imports of Japanese vehicles and automotive parts as part of a strategy to reduce U.S. trade deficits with the international community. The move is widely seen as a bargaining tool for Washington to get what it has long sought from Tokyo — a free trade agreement.

However, the world’s third largest economy is opposed to a bilateral trade deal and must find other ways to appease Trump, strategists told CNBC.

“I don’t think there’s any reason not to take [Trump] seriously,” said Tobias Harris, vice president at Teneo Intelligence: “So now, Japan has to entertain either some pretty serious market access concessions or enter FTA talks — both things that Japan has tried to avoid since Trump took office.”

The matter is expected to dominate Abe’s summit with Trump which is slated for Sept. 26 in New York.

The tariffs are considered economically damaging for the Asian giant since passenger cars make up around 30 percent of Japanese exports headed stateside. It’s also politically embarrassing for Abe, who has presented himself as someone with close ties to Trump, Harris explained.

If Trump acts on his threats, Abe will find himself in a situation where he has to retaliate with similar measures and that could derail the broader bilateral relationship, said Harris. That’s currently the case with Beijing, which has responded to Trump’s trade penalties with tit-for-tat measures.

The last meeting between U.S. and Chinese officials was last month and was led by David Malpass, the Treasury undersecretary for international affairs. Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman, said the Mnuchin team is not likely to make much progress, even if it does meet with Chinese officials. A revised North American Free Trade Agreement would be a positive for the Trump administration ahead of the November election, but China is far stickier. “I think NAFT

U.S. officials are reportedly seeking a round of high-level talks with China before the next series of tariffs are imposed, but strategists were skeptical the proposed talks will do much to ratchet down trade tensions before the November election.

“I think they are genuinely concerned about financial markets reaction of going for tariffs on $200 billion on imports from China. That’s a big hit. The financial markets have been very skittish about these trade threats,” said Gary Hufbauer, senior fellow at Peterson Institute for International Economics. “They risk triggering a shock prior to the November election.”

The Wall Street Journal reported Wednesday that a group of senior officials, led by Treasury Secretary Steven Mnuchin, invited their Chinese counterparts to meet on bilateral trade. The article, quoting sources, said the Trump administration is reaching out, in an effort to give Beijing another chance to address U.S. concerns before it imposes new tariffs on Chinese imports. The paper quoted unnamed sources.

Sources told CNBC the U.S. is in the early stages of proposing the discussions.

The Trump administration has tariffs ready to go on $200 billion in Chinese imports, after a comment period on the tariffs ended last week. President Donald Trump also threatened even more tariffs, on another $267 billion in goods. Last week, a number of companies, including Apple and Intel, complained that tariffs would hurt business and result in higher prices.

Strategists have said they do not expect Chinese officials to move forward on trade until after they see the outcome of the November elections and whether Trump’s hand is possibly weakened by it if Democrats make a big sweep.

“I think that I’m not expecting any big breakthroughs. I think what the administration is looking for is some immediate concessions,” said Hufbauer. He said the Chinese could make concessions by ending tariffs on key agricultural products, like soy beans and pork, and end the requirement for technology companies to form joint ventures if they want to operate in China.

“That would be a fast deliverable. They decided they would start a charm offensive with U.S. companies, be nice to them instead of beating up on them. An extension of that could be to relax compulsory joint venture arrangements,” he said.

The last meeting between U.S. and Chinese officials was last month and was led by David Malpass, the Treasury undersecretary for international affairs.

Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman, said the Mnuchin team is not likely to make much progress, even if it does meet with Chinese officials. He said headlines on the meeting did drive down the dollar in Wednesday trading, as they temporarily boosted stocks.

“The way Trump has conducted policy undermines the authority of the Treasury Department to negotiate trade agreements,” he said.

The U.S. continues to push trade on other fronts, and the U.S. and Canada are meeting Thursday. Reports that Canada is willing to bend on its dairy protections was encouraging to some, who expect a deal in the near future.

A revised North American Free Trade Agreement would be a positive for the Trump administration ahead of the November election, but China is far stickier.

“The question is what is the right tactic to get from point A to point B, and there’s an argument to be made that we need to tough in negotiations [with China],” said Tom Block, Fundstrat Washington policy strategist. “I think NAFTA is different. While there is general agreement China is acting inappropriately, there was general agreement that by and large NAFTA was a good partnership between these three countries.”

Citigroup global economist Cesar Rojas expects a resolution in NAFTA by the last week in September, a deadline set by the U.S. Trade Representative. Canada reportedly made some concessions on dairy which boosted the Canadian dollar Wednesday.

“We think there could be an agreement between the U.S. and Canada but it will require concessions from both sides,” he said. Rojas said the U.S. deal with Mexico was struck after both countries bent on some demands.

While the resolution on NAFTA could be close at hand, any agreement with China appears far off.

“While this is not a foregone conclusion, we believe trade tension is likely to get worse before it gets better,” wrote Barclays economists Wednesday. This would have reduced 2017 merchandise trade volume between the U.S. and China by 25 percent, or $156.5 billion. But they expect the impact to take time, and they estimate a peak decline in annual trade volumes in five or six years.

President Donald Trump on Monday ruled out making any concessions to Turkey to gain the freedom of a detained American pastor and said he was not concerned that retaliatory tariffs he imposed will have a ripple effect and hurt the European economy. Trump, speaking to Reuters in an Oval Office interview, said he thought he had a deal with Turkish President Recep Tayyip Erdogan when he helped persuade Israel to free a detained Turkish citizen. He had thought Erdogan would then release pastor Andre

President Donald Trump on Monday ruled out making any concessions to Turkey to gain the freedom of a detained American pastor and said he was not concerned that retaliatory tariffs he imposed will have a ripple effect and hurt the European economy.

Trump, speaking to Reuters in an Oval Office interview, said he thought he had a deal with Turkish President Recep Tayyip Erdogan when he helped persuade Israel to free a detained Turkish citizen.

He had thought Erdogan would then release pastor Andrew Brunson.

“I think it’s very sad what Turkey is doing. I think they’re making a terrible mistake. There will be no concessions,” he said.

Trump has imposed tariffs on imports of Turkish steel and aluminum in response to Erdogan’s refusal to free Brunson, raising concerns of economic damage in Europe. “I’m not concerned at all. I’m not concerned. This is the proper thing to do,” he said, when asked about the potential damage to other economies.

Trump said Erdogan had wanted the Turkish citizen returned from Israel. Trump and Erdogan met in Brussels for a NATO summit in mid-July where they discussed Brunson’s case and what could be the way forward to release the pastor, a senior White House official said earlier.

Turkey had sought U.S. help to persuade the Israelis to release a Turkish woman who was being held in Israel, the senior official said. In exchange Turkey would release Brunson and other Americans being held in Turkey. Trump said he kept his side of the bargain.

“I got that person out for him. I expect him to let this very innocent and wonderful man and great father and great Christian out of Turkey,” Trump said. Israel, which confirmed that Trump had requested Ebru Ozkan’s release, deported her on July 15.

Ankara has denied ever agreeing to free Brunson in return.

Trump added: “I like Turkey. I like the people of Turkey very much. Until now I had a very good relationship as you know with the president. I got along with him great. I had a very good relationship. But it can’t be a one-way street. It’s no longer a one-way street for the United States.”

Trump had suggested earlier this month he would be willing to meet Iranian President Hassan Rouhani if the Iranians wanted to discuss the dispute over Iran’s nuclear program. The Iranians, including Supreme Leader Ali Khamanei, have shrugged off the offer. Asked to respond to Iran’s refusal to meet, Trump said it not matter to him whether they met or not.

Japan has two difficult options as it continues trade discussions with the United States: Get slapped with auto tariffs or make concessions that could hurt Prime Minister Shinzo Abe’s support at home. Bilateral talks between the U.S. and Japan are currently underway in Washington. So they’re going to a find a way to thread the needle between those two unpleasant options,” Harris told CNBC’s “Squawk Box” on Friday. Abe could offer the U.S. greater access to its agricultural sector to avoid tariff

Japan has two difficult options as it continues trade discussions with the United States: Get slapped with auto tariffs or make concessions that could hurt Prime Minister Shinzo Abe’s support at home.

Bilateral talks between the U.S. and Japan are currently underway in Washington. The administration of President Donald Trump has the upper hand as it’s “wielding the threat of automobile tariffs pretty effectively,” said Tobias Harris, vice president at Teneo Intelligence.

Car exports to the U.S. are a key source of growth for Japan, accounting for around 1 percent of the country’s gross domestic product, according to trade statistics from both countries. The U.S. has said it’s considering imposing tariffs of up to 25 percent on auto imports, which would hurt demand for Japanese cars.

“I think Japan now finds itself in a position where it has to choose between accepting those tariffs — which I think are unacceptable — and possibly making concessions in the areas that could be politically difficult for Abe. So they’re going to a find a way to thread the needle between those two unpleasant options,” Harris told CNBC’s “Squawk Box” on Friday.

Abe is heading into a leadership contest within his own party next month. Winning the race in the Liberal Democratic Party would place him on track for a third three-year term in power.

Japan’s upper house of parliament is also due for elections next year and making too many concessions with the U.S. may hurt his political support base, analysts said.

Abe could offer the U.S. greater access to its agricultural sector to avoid tariffs on its automakers, some observers say. Tokyo had previously done so when it entered a multilateral trade pact — the Trans-Pacific Partnership — with the U.S. which eventually pulled out of it.

But making the same offer in a bilateral setting may be tough for Abe as Japan could be seen as giving in to the U.S., analysts said.

“Let’s remember where Prime Minister Abe comes from: He’s a conservative, he’s a hawk, he comes from the right of the LDP and that traditional power base has been the farmers,” Andrew Staples, global editorial director and Southeast Asia director at The Economist Corporate Network, told CNBC’s “Street Signs” on Friday.

The need for economic ties to the rest of the world increased when the Trump administration announced planned sanctions on Iranian oil exports starting in November. For Iran one nation matters more than any other to its oil economy, and it is also Trump’s largest global trade rival: China. But China, already the biggest buyer of Iranian oil, is not expected to heed U.S. demands. In fact, the Iranian oil sanctions could give China leverage in stalled trade negotiations with the United States. On

Since President Donald Trump withdrew the United States from the Iran nuclear deal in May, Iran has been pleading with other nations to keep its oil-dependent economy alive. The need for economic ties to the rest of the world increased when the Trump administration announced planned sanctions on Iranian oil exports starting in November. For Iran one nation matters more than any other to its oil economy, and it is also Trump’s largest global trade rival: China.

European companies have been winding down their purchases of Iranian oil, and the threat of sanctions on Iranian business has pushed out banks, many of which had paid severe fines for sanction violations in the past. But China, already the biggest buyer of Iranian oil, is not expected to heed U.S. demands. In fact, the Iranian oil sanctions could give China leverage in stalled trade negotiations with the United States.

“Now that the trade relationship is in jeopardy, why would they do that?” Derek Scissors, resident scholar of the American Enterprise Institute, said of China’s pulling back on purchases of Iranian oil. “If we tell the Chinese, ‘Oh, we’ll cancel our pending tariffs as long as you stick to the Iran sanctions,’ they’ll do it in a second.”

On Monday a war of words between the United States and Iran erupted, with Trump and his top national security advisor John Bolton threatening Iran. The harsh White House words apparently came in response to recent suggestions from Iran that it could close the Strait of Hormuz, a critical seaway for global oil shipments. The U.S. Energy Information Administration states that by volume of oil transit, the strait is the busiest global choke point for oil. In 2016, data from the EIA showed total flows through the channel reached a record high of 18.5 million barrels a day. China, Japan, India, South Korea and Singapore are the largest destinations for oil moving through the strait.

On Tuesday Iran’s foreign ministry reportedly said it would implement countermeasures against the United States if it tries to block its oil exports. “If America wants to take a serious step in this direction, it will definitely be met with a reaction and equal countermeasures from Iran,” Foreign Ministry spokesman Bahram Qassemi was quoted as saying.

China could make ‘marginal concessions’ on trade to the US: Professor 9 Hours Ago | 02:34Beijing’s purported offer of a package aimed at cutting its trade deficit with the U.S. by up to $200 billion a year is all about politics, an academic said Friday. China is reportedly offering U.S. President Donald Trump the package of trade concessions and increased purchases of American goods that will cut bilateral trade deficit by up to $200 billion a year, U.S. officials familiar with the proposal told

China could make ‘marginal concessions’ on trade to the US: Professor 9 Hours Ago | 02:34

Beijing’s purported offer of a package aimed at cutting its trade deficit with the U.S. by up to $200 billion a year is all about politics, an academic said Friday.

“This is not about economics. It’s about politics and geopolitics,” said Pushan Dutt, a professor of economics and political science at graduate business school, Insead.

China is reportedly offering U.S. President Donald Trump the package of trade concessions and increased purchases of American goods that will cut bilateral trade deficit by up to $200 billion a year, U.S. officials familiar with the proposal told Reuters.

A person familiar with the talks told Reuters the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of U.S. farm products including fruit, nuts, pork, wine and sorghum.

“It’s the optics which matter, it’s catering to the base which matters. The Chinese realize this very well and that is actually a positive thing,” said Dutt, referring to the purported elimination of tariffs for the agricultural sector — a key political base of Trump’s.

News of the offer came during the first of two days of U.S.-China trade talks in Washington focused on resolving tariff threats between the world’s two largest economies, Reuters reported.

Dutt said while Beijing will make some concessions, they will not be significant ones.

“The best case scenario and also the most realistic scenario is that China gives some marginal concessions which helps address the bilateral trade imbalance between the U.S. and China,” Dutt told CNBC.

“This allows Donald Trump to actually proclaim victory, cast himself as a very good negotiator and sort of move on,” Dutt added.

China’s goods deficit with the U.S. stood at $375 billion last year. The U.S.’ two biggest exports to China were aircraft at $16 billion last year, and soybeans, at $12 billion.

French President Emmanuel Macron told CNBC Friday that the problem that U.K. Prime Minister Theresa May has is that nobody explained to the British people the consequences of a Brexit vote. When asked if the European Union would be able to make some verbal concessions to allow May to sell a Brexit deal at home, Macron told CNBC that there’s no room for such unofficial compromises. “There are concessions to make from both negotiating teams during phase one, but we aren’t going to make concessions

French President Emmanuel Macron told CNBC Friday that the problem that U.K. Prime Minister Theresa May has is that nobody explained to the British people the consequences of a Brexit vote.

When asked if the European Union would be able to make some verbal concessions to allow May to sell a Brexit deal at home, Macron told CNBC that there’s no room for such unofficial compromises.

“There are concessions to make from both negotiating teams during phase one, but we aren’t going to make concessions based on discourse,” he said.

“The objectives are fixed, they’re conducted from the European side by Michel Barnier, and we have to respect that,” Macron told CNBC, referring to the EU’s approach of discussing citizens’ rights, financial settlement and the Irish border, before moving on to talks on trade.

“I believe the problem that Theresa May has is that those who defended Brexit have never explained to the British people what the consequences are,” he said after a European Union summit in Brussels, Belgium.

Speaking at the same summit, May had denied earlier Friday that the U.K. had increased its financial offer to the European Union as part of its steps to leave the bloc.

“What I’ve made clear to my EU counterparts in relation to financial contribution is what I set out in my Florence (Italy) speech, which is that I’ve said nobody need be concerned for the current budget plan that they would have to pay more or receive less as a result of the U.K. leaving and that we will honor the commitments we have made during our membership,” May told reporters.

U.S. taxi firm Uber is prepared to make concessions as it seeks to reverse a decision by London authorities not to renew its license in the city, which represents a potentially big blow for thefast-growing company, a newspaper reported. The Sunday Times also quoted sources close to London’s transport body as saying the move was encouraging and suggested the possibility of talks. “While we haven’t been asked to make any changes, we’d like to know what we can do,” Tom Elvidge, Uber’s general manag

U.S. taxi firm Uber is prepared to make concessions as it seeks to reverse a decision by London authorities not to renew its license in the city, which represents a potentially big blow for the

fast-growing company, a newspaper reported.

The Sunday Times also quoted sources close to London’s transport body as saying the move was encouraging and suggested the possibility of talks.

“While we haven’t been asked to make any changes, we’d like to know what we can do,” Tom Elvidge, Uber’s general manager in London, told the newspaper. “But that requires a dialogue we sadly haven’t been able to have recently.”

A spokesman for Transport for London (TfL) declined to comment. The Sunday Times said Uber’s concessions were likely to involve passenger safety and benefits for its drivers, possible limits on working hours to improve road safety and holiday pay.